Select Page

Contracts II
University of Kansas School of Law
Drahozal, Christopher R.

CONTRACTS II
ARTICLE II
SCOPE
§90 serves as consideration, which in turn holds the offer open for longer than 3 months§90
Article II governs all “transactions in goods” 2-102
1. SCOPE
Transactions
Goods 2-105(1)
“moveable[s]” able to be identified at the time of transaction
Article II, therefore, generally does not apply to transactions involving real estate or services
fixtures
Things in action:
Future Goods:
Specialty Manufactured Goods:
Minerals, oil, and natural gas:
Article II does not apply to a “thing in action” (e.g. rights and future interests) 2-105(1) A future good is one not both “existing and identified” at the time of agreement. Future goods are considered “goods” under Article II. 2-105(2)considered goods under Article II. 2-105(1)Sale of minerals, oil, and natural gas involves a “good” so long as the seller is to sever such from the ground. 2-107: Article II does not apply to fixtures
courts have generally read the statute broadly, so as to include more than sales. “Transactions” often include transfers such as bailments
Mixed Contracts
Relation to the common Law
Effect of Merchant
Contract Formation
Contract formation under Article II
Every contract under Art. II must meet the requirements of assent (i.e. offer and acceptance) and consideration
Consideration
Assent
Formation by Writing
acceptance
UCC doesn’t specify that consideration is essential to contract formation
common law requirement of consideration incorporated under 1-103
Contract may be formed in any manner sufficient to show agreement [2-204(1)] even though moment of its making is undetermined [2-204(2)].
unless indicated by language or circumstances, an offer invited acceptance in any manner reasonable under the circumstances. 2-206(1)(a)
Purchase orders
unless indicated by language or circumstances, a purchase order acts as an offer that may be accepted either by a promise to ship or by the shipment of conforming or non-conforming goods 2-206(1)(b)
Formation by Conduct
conduct may be sufficient to establish the formation and existence of a contract. 2-204(1)
A party may make a firm offer, under which the offer remains open for a certain duration of time. 2-205a firm offer may only be made by a merchant
Merchant:
Goods:
Signed Writing:
“signed”:
Art. II does not require a complete signature. A ‘signature’ may be printed, stamped, or written, and may take the form of initials, symbols, thumbprints, or letterhead. 1-201(39)the terms of the firm offer must indicate that the offer is to remain open
Terms:
Consideration:
Duration:
When no consideration given:
When consideration given:
Reliance:
may be argued that reliance upon the existence of a firm offer under Rstmt
May be argued that when consideration is given in a firm offer, the offer may be held open longer than 3 months because 2-205 applies only to firm offers without consideration. Thus, the common law rule of firm offers with consideration, incorporated via 1-103, governs the offermay not be held open longer than 3 months
If the firm offer states a fixed duration, it will be held open for that duration. If there is no stated duration, the firm offer remains open for a reasonable time:Consideration is not required a firm offer must be made in a signed writingThe offer may be either for the purchase or sale of goods
Firm Offers
For a contract for the sale of goods more than $500 to be enforceable under 2-201(1), the contract must be accompanied by a writing which sufficiently indicates that the contract was formed, contains the quantity term, and is signed by the party trying to avoid the contract.
Requirements of a Writing
Requirements of a writing under Article II
Statute of Frauds
When the statute of frauds of applies
Sale of Goods
Amount
SOF applies when the contract is for more than $500 SOF applies to contracts for the sale of goods
When a writing is sufficient
Quantity term
quantity stated does not have to be accurate but the contract is only enforceable up to the quantity stated on the writing. 2-201(1)doe not require a complete signature; rather a signature may be printed, stamped, or written, and may take the form of initials, symbols, thumbprints, or letterhead.
Signature by Adverse Party
1-201(39)
The only term which must appear is the quantity term 2-201 Official Comment 1. (i.e. a writing is necessary)
Exceptions to the Statute of Frauds
Merchant exception to the statute of frauds
Between Merchants
Writing:
Sufficient against Sender:
Received:
A party “receives” a writing when:
it comes to his attention or
is duly delivered to his lace of business or at any other designated area
Reasonable Time
Reason to know the contents
Without an objection:
Written Notice:
Objection to contents:
The objection must not be to the terms of the contract; rather, the party must object that a contract was formed at all.
The merchant’s exception will not apply when the other party sends written notice of objection to the contents of the writing within 10 daysWriting includes printing, typing, or any other reduction to tangible form. 2-201(46). Note: Telephone call not sufficient: The other party must have reason to know of its contents: The writing must have been received by the other party within a reasonable amount of time The writing under the merchants exception must have been “received” by the other party. The writi

] or consistent additional terms [2-202(b)]A fully integrated contract, one intended to be a final, definitive bargain, may not be contradicted or supplemented by previous or contemporaneous terms. 2-202(b). A fully integrated contract may be supplemented by course of dealing, usage of trade, and course of performance [2-202(a)] so long as such are not explicitly considered within the contract.
Creation of Warranties
Express Warranties
Creation under 2-313. Express warranties by the seller may be created in the following ways:
Affirmation of fact or promise:
Puffing:
2-313(2)The seller’s affirmation of fact must become part of the basis of the bargain between the buyer and seller. When there are multiple sources of information, it becomes more difficult to demonstrate that the seller’s acts alone were the basis of the bargain. Further, it is essential that the seller’s acts occur prior to the formation of the contract.
An affirmation of fact or promise which becomes the basis of a bargain will serve to create an express warranty. 2-313(1)(a). It is not necessary that the seller use words such as “warranty” or “guarantee” in the creation of an express warranty. 2-313(2). Mere statements of value or of the seller’s opinion of the goods is not sufficient to create an express warranty.
Basis of the Bargain:
fact that a party is not a merchant is irrelevant as to whether or not Art. II applies to a given transaction
Most of Art. II’s substantive provisions (e.g. warranties) apply exclusively to merchants
1-103
When Art. II expressly addresses an issue, Art. II provision supersedes the common law.
If Art. II does not specifically address an issue, common law governs issue
involves both goods and services
Courts use one of two tests to determine applicability of Article II.
1. Predominate Purpose Test
If the goods portion of the contract predominates over the service portion of the contract, Art. II will govern the transaction. See Kaplan v. Cablevision of PA, Inc.
Gravamen of the action Test
If the source of the Ps complaint arises solely from the portion of the contract involving goods, Art. II will apply to the transaction